Gambling on April gas bills

Published 4:00 am, Wednesday, March 29, 2006

Summer is coming early for PG&E this year -- and for you as well. Better hope we don't have unusually chilly weather next month.

At issue here is the utility's decision, for the first time, to move natural-gas billing for April from residential customers' so-called winter allotment to the summer allotment.

This is a bit technical, but what it means is that San Francisco's Pacific Gas and Electric Co. is reducing the amount of lower-priced gas -- the "baseline allowance" -- that customers can use in April before higher rates kick in.

The utility won't be making any extra money as a result of the change. On an annual basis, it'll still be billing customers the same amount.

But consumer advocates say you'll almost certainly notice a difference in your April gas bill. It may not be the cruelest month, but it's about to get pricier as part of efforts to keep heating bills from skyrocketing in the winter.

In the past, April was included with the winter months, meaning that a higher baseline allowance was offered for usage. Charges under PG&E's two-tier rate system don't go up unless (or until) that allowance is surpassed.

Beginning on Saturday, however, April will be considered a summer month by the utility, meaning that a lower baseline allowance will be provided.

"We did this with the best of intentions," said Christy Dennis, a PG&E spokeswoman. "We think this will be best for our customers."

But she acknowledged that the utility is, in effect, rolling the dice with ratepayers' money.

"If we have a cold snap in April," Dennis said, "then, no, this wouldn't be a benefit."

The April switch means residential customers will receive a baseline allowance of 60 percent of average seasonal use. In other words, that's how much gas they'll get at the cheaper of PG&E's two rates.

Previously, April gas rates wouldn't go up until a customer had topped 70 percent of average seasonal use.

John Avina is an energy-industry consultant in San Luis Obispo (PG&E is one of his clients). He crunched historical usage and rates for the Bay Area through a computer model.

"If you have an April that's as cold as your typical March, your gas usage for the month could double from a year earlier," Avina said.

But he said the new baseline allowance means gas bills would be more than twice as high than before under such circumstances.

Bob Finkelstein, executive director of The Utility Reform Network in San Francisco, said the idea behind the April switch is to ease price volatility in gas bills from November to March, when heating costs are highest.

"The effect is to make bills flatter throughout the year," he said. "It's in consumers' best interest to have lower rates during the months that consumption is highest."

With the lower baseline allowance for April, Finkelstein acknowledged that many PG&E customers will see higher gas bills next month no matter what.

Based on historical averages, though, he said ratepayers shouldn't be dinged too hard because heating costs tend to drop significantly with the arrival of spring.

"Of course, there's always a risk of something unexpected happening with the weather," he said. "We think this is a pretty safe bet. But there is some element of a bet in it."

In December, the average household paid PG&E $88.44 in heating costs. That total shot up to $114.71 in January before slipping to $107.44 in February and then an anticipated $68.05 this month.

Last April, the average household paid $49.73 in heating costs. This year, thanks to the switch from winter to summer allotment, PG&E is projecting that average April gas bills will run $62.01 -- a 25 percent increase.

PG&E's Dennis said this is due primarily to the utility's "10/20 program," under which customers will receive a 20 percent rebate if they reduced their cumulative gas bills by at least 10 percent in January, February and March from a year before.

The expected $164 million in rebates will be funded by ratepayer money. In other words, those who didn't conserve will be handing cash to those who did.

Dennis said about 35 percent of residential and small-business customers are expected to qualify for the average $45 rebate. All utility customers were automatically enrolled in the program and will be notified if they're eligible for some cash back.

Dennis said gas bills in April 2007 should be lower than this year if PG&E doesn't continue the 10/20 program.

"The weather in January wasn't as cold as last year, which helped our customers conserve natural gas," Tom Bottorff, PG&E's senior vice president of regulatory relations, said in a statement. "But the cold snaps during much of February and March have proven to be a bit more challenging to keep usage down."

Dennis said the utility will watch closely to see how customers react to April changing from winter to summer.